Government low-balling us on second-rate NBN

Justifications for the multi-technology mix only add up when you ignore the inconvenient numbers.

This week's NBN review supports the government's decision to scrap the national fibre-to-the-premises rollout and instead take a patchwork multi-technology mix approach – hooking up a quarter of homes to fibre but relegating the rest to HFC cable, fibre-to-the-node or satellite. It's telling that Communications Minister, Malcolm Turnbull, was happy to sign off on this approach before the report was completed, after criticising Labor for favouring fibre-to-the-premises without first crunching the numbers.

The NBN's Multi-Technology Mix threatens to put us back where a started – a nation of digital haves and have-nots. Photo: Glenn Hunt

If you're still not convinced that the NBN-lite is a bargain, Turnbull is happy to spell it out for you on a whiteboard – explaining why fibre-to-the-node is more cost-effective than fibre-to-the-premises. The always articulate Turnbull makes some valid points, but the numbers only stack up if you assume low growth in bandwidth demand, ignore the costs in maintaining legacy infrstructure and don't factor in the possibility of future fibre upgrades.

It's like arguing that it's more cost-effective to a build a single-lane Sydney Harbour Bridge, while conveniently ignoring the fact that it won't meet our future needs. It's a short-sighted approach which looks good in a spreadsheet but is designed to win a political argument rather than meet the future needs of the country.

Comparing the cost of fibre-to-the-node to fibre-to-the-premises overlooks a few key issues which seriously impact on the value proposition;

maintaining the copper network

fixing copper black spots

upgrading and maintaining the HFC network

extending the fibre network later to meet growing demand

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The costings on both sides of the NBN debate have been questionable, but you can't take any financial analysis of the multi-technology mix plan seriously if it doesn't allow for all these factors. The big fear is that with a "near enough is good enough" NBN they'll overlook many of the problems with the copper in the ground, as well as skimp on the upgrade required for the HFC network to support triple its current users.

Turnbull argues that as internet speeds increase we reach a point where "the marginal utility goes to zero" – in other words it's already fast enough to meet your every need so there's no advantage in increasing speeds. If most people won't pay for faster speeds then it's not worth building a better network, according to Turnbull's logic.

This sounds reasonable until you stop to think about what that graph would have looked like five years ago. Where would we have drawn the line and said it was fast enough for most people? Now consider the fact that the NBN needs to meet our needs for decades, not just until the next election. Where we draw the line today is unlikely to cut it in the long-term, especially when the latest NBN review is rather conservative when estimating our future bandwidth requirements.

The aim of the national fibre-to-the-premises network wasn't simply to deliver greater speeds. It was to stop Telstra holding the country to ransom and create a level playing field, to prepare us for the future. Giving everyone the same quality of broadband increases the value of the network, because it creates the economies of scale needed to encourage the public and private sectors to invest in new online services that take advantage of the faster speeds.

Instead the multi-technology mix could put us back where we started – with a hotch-potch broadband mess that condemns some Australians to live as second-class online citizens. When half the country has second-rate broadband there's less incentive to build new services to take advantage of faster speeds, so the "zero marginal utility" argument becomes a self-fulfilling prophesy.

Apparently we're not building a nationwide 100Mbps network because people won't pay for 100Mbps speeds when there aren't 100Mbps services. There aren't 100Mbps services because there aren't enough 100Mbps-capable homes, because we didn't build a nationwide 100Mbps network. If you're going to shout down the "build it and they will come" philosophy, at least acknowledge the true cost of only half building it.

Low-balling us on a second-rate NBN certainly doesn't sound like good value for money, not unless you're a politician.